Summary of the Corporate Business Plan 2015-2016 to 2017-2018

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Collections and returns compliance

The Canada Revenue Agency (CRA) undertakes a broad range of activities to support taxpayers' compliance with federal and provincial legislation. The previous chapters explained the steps the CRA is taking to make sure Canadians accurately complete tax returns and report income. To fully comply with Canada's tax laws, taxpayers must also file their returns on time, pay their tax debts on time and, when required, register to collect GST/HST or other levies, and remit amounts deducted at source to the CRA. Many of the CRA's collections and returns compliance activities focus on early detection and correction of failure to comply.

Over 92% of all individuals filed and paid their taxes last year without CRA intervention. This high rate of voluntary compliance allows the Agency to concentrate on addressing non-compliance. Recent advances in information technology and data analysis are changing the CRA's approach to collections and returns compliance. Using these tools, the Agency can more accurately assess and predict taxpayer behaviour, which in turn helps to identify lower-risk taxpayers. A well-directed phone call or a nudge letter is often enough to remind these taxpayers of their obligations, to increase awareness of the consequences of failing to file a tax return or pay a debt, and to offer assistance as needed. Using quick, low-cost methods to help lower-risk taxpayers enables the CRA to focus more resources on taxpayers who are at a much higher risk of non-compliance.

During the planning period, the CRA will advance its three-year Non-Audit Compliance Initiative to boost efforts to identify higher-risk taxpayers in three key areas: trust accounts, non-filers, and GST delinquent filers. This initiative will further protect Canada's revenue base by: increasing examination coverage of employer payroll and GST registrant books and records, to ensure source deductions are properly withheld and remitted as required; identifying additional non-filers who have tax amounts owing; and expanding coverage of sectors at higher risk for underground economy activity.

Working with employers and businesses (trust accounts)

Employers form a critical role in Canada's self-assessment tax system by collecting income tax at source. Each year, the CRA collects more than $200 billion through source deductions remitted by approximately 1.6 million employers.

The CRA works with employers to make sure they fulfil their obligations in a timely manner, such as withholding, remitting, reporting, and filing for payroll deductions, GST/HST, other levies, and non-resident taxes. To assess whether employers meet these requirements, the Agency reviews more than 480,000 payroll accounts annually, and resolves more than 240,000 GST/HST files through its GST/HST delinquent filer program. Each year, the CRA conducts employer compliance audits and identifies over $1.8 billion in non-compliance, including source deductions.

Data analysis is helping the CRA to prevent employer non-compliance. For example, the Agency can more readily identify key points in the life cycle of employers, such as when businesses hire new employees or register for the GST/HST. Based on this knowledge, the CRA uses cost-effective, educational, and proactive approaches such as webinars, automated phone calls, and letters to remind employers of their obligations associated with payroll deductions, GST/HST, and other levies.

Planning highlights

• In 2015-2016, the CRA will expand its work to educate employers regarding taxable benefits, ensuring employers have a better understanding of their obligations to withhold, report, and remit taxes on employee benefits.
• By the end of 2015-2016, the CRA will improve the predictive capability of its data mining tools and automate certain processes to assess GST/HST amounts owed by select registrants who have not complied with their obligation to file.
• The CRA is investing in technology to allow for improved risk-based management of the GST/HST non-registrant workload. Effective in early 2015, the new technology will allow the Agency to better leverage available business intelligence and eliminate manual processes.

Non-Filers

The CRA encourages individuals, businesses, and trusts to file tax returns on time. In most instances, this means ensuring taxpayers understand their tax obligations or offering assistance with filing requirements. However, the CRA is also responsible for identifying filing non-compliance and pursuing individuals, corporations, or trusts who do not file tax returns despite a legal obligation to do so. Each year, the Agency's efforts to identify and pursue non-filers bring in over 600,000 additional income tax and information returns, and help identify over $2.7 billion in non-compliance.

As part of the Non-Audit Compliance Initiative, the CRA will expand efforts to identify non-filers in other areas, for example those participating in the underground economy. The Agency will use such proven methods as automated system checks to match information slips and corporate business numbers against submitted tax returns, the matching of employer reports on taxable benefits, and income earned to individual income tax and benefit returns, as well as the review of informant leads and information from various other reporting sources.

Planning highlights

• The CRA will expand its efforts to identify non-filers participating in the underground economy (UE). This will include projects such as a cheque-cashing project running until March 2017.
• The CRA will enhance the effectiveness of its non-filer data mining model to improve the risk scoring of account selection and to improve related workload strategies. A product is anticipated to be ready for testing and validation by October 2015.
• The CRA will increase the use of the Debt Management Call Centre in 2015-2016, by redirecting greater numbers of non-filer accounts to the call centre and assessing the impacts of this lower-cost intervention.

Managing debts

To be fully compliant, individual and business taxpayers must pay all taxes on time. The CRA collects tax debts on behalf of federal, provincial, and territorial governments. It also collects debts for such government programs as defaulted Canada Student Loan amounts, employment insurance overpayments, and Canada Pension Plan overpayments.

Managing tax debt is critical to protecting Canada's revenue base and providing the Government of Canada with the revenue it needs to support programs and priorities. Each year, the Agency resolves billions of dollars in outstanding debt through tax services offices and the call centre.

Using improved information technology and data analysis, the CRA is taking a more targeted and risk-based approach to collecting tax debt. For example, data analysis helps to distinguish various taxpayer segments including those who can and want to pay, those who owe but cannot pay immediately, and those who are unwilling to pay. Based on these insights, the CRA can better identify the lower-risk accounts most likely to self-resolve and, in those cases, use lower-cost strategies such as automated letters and telephone calls. This approach will allow the Agency to redirect more compliance resources towards accounts representing the highest risk of loss.

Planning highlights:

• A 10-year collection limit on most tax debts took effect in March 2014. The CRA is developing an automated system so the Agency can track and resolve debts within the time limit. This is a multi-year project with system changes scheduled for February 2015, October 2015, and 2016.
• By 2015-2016, the CRA will develop specialized strategies to manage the unique risks associated with tax debt on complex workloads, such as international accounts and tax avoidance schemes.
• By 2015-2016, the CRA will identify ways to more efficiently and effectively manage debts associated with Government programs, including defaulted Canada Student Loan amounts, Employment Insurance overpayments, and Canada Pension Plan overpayments.
• To ensure clarity in its communications with taxpayers regarding tax debt collection, the CRA will make sure all correspondence uses easy to understand plain language.

Budgetary financial information

(dollars)

	2015-2016 Main Estimates	2015-2016 planned spendingFootnote 1	2016-2017 planned spendingFootnote 1	2017-2018 planned spendingFootnote 1
Program
Collections and returns complianceFootnote 2	469,453,195	469,453,195	469,262,938	443,295,719
Sub-programs
Trust accounts—complianceFootnote 2	-	83,756,946	84,304,112	70,814,864
Non-filer—complianceFootnote 2	-	66,666,041	65,053,750	56,262,959
Collections—tax and government programs	-	319,030,208	319,905,076	316,217,896

Human resources

(full-time equivalents)

	2015-2016	2016-2017	2017-2018
Program
Collections and returns compliance	7,638	7,735	7,358
Sub-programs
Trust accounts—compliance	1,922	1,873	1,679
Non-filer—compliance	932	925	798
Collections—tax and government programs	4,784	4,937	4,881

Performance measurements

The CRA performance measures for collections and returns compliance are set out on page 97. These measures indicate the Agency:

• Effectively uses available tools and resources to complete the forecasted workload.
• Resolves tax debt on a timely basis and within the targeted levels. The CRA aims to resolve most debt within the first year, and to make sure no more than 18% of tax debts are beyond five years old. These targets compare favourably with other tax administrations. The targets recognize some debts will take longer to resolve. For example, the appeals process may extend the time needed to resolve some debts.
• Manages the overall growth of tax debt. The CRA aims to resolve debt at a rate of at least 90% of the intake during the year. This target recognizes some debt will be uncollectable, for example, as a result of bankruptcy.

Footnotes

Footnote 1

Planned spending refers to those amounts for which a Treasury Board submission approval has been received by no later than February 1, 2015. This cut–off date differs from the Main Estimates process. While in any given year planned spending may include amounts incremental to planned expenditure levels presented in the Main Estimates, this year it does not.

Return to footnote 1 referrer

Footnote 2

The decrease in planned spending for the trust accounts and non-filer subprograms results primarily from the conclusion of funding received for special projects.

Return to footnote 2 referrer

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Date modified:

2015-04-01